- Official says talks to resolve antitrust lawsuit have ended
- DOJ sued to block $3.3 billion deal for GE appliance unit
Electrolux AB plunged in U.S. trading after the Justice Department rejected a proposal to resolve a government lawsuit seeking to block the $3.3 billion takeover of General Electric Co.’s household-appliance business.
The Stockholm-based company’s offer to sell assets falls “well short” of replacing the competition that would be lost as a result of the deal, Ethan Glass, a lawyer for the department’s antitrust division, said at a hearing Friday in Washington federal court. Settlement discussions have ended, he said.
Electrolux’s American depositary receipts fell 6 percent to $55.90, the biggest drop since the U.S. sued to stop the takeover on July 1.
The U.S. claims the tie-up threatens to raise prices for consumers. The government’s lawsuit against Electrolux and Fairfield, Connecticut-based GE to block the deal is set to go to trial on Nov. 9 before U.S. District Judge Emmet Sullivan, who encouraged the two sides to continue talking.
“We presented the DOJ with what we believed was a reasonable divestiture settlement package that addressed the government’s concerns,” Electrolux spokeswoman Eloise Hale said in a statement. “We strongly disagree with their assessment of the acquisition, and are confident in the merits of our case.”
If the Swedish company prevails, the GE deal would add a stable of brands such as Hotpoint to a lineup that already includes AEG stoves and Frigidaire refrigerators. Europe’s biggest appliances-maker targeted the acquisition to boost its standing in North America and put it on a par with market leader Whirlpool Corp.
Chief Executive Officer Keith McLoughlin said during last week’s quarterly earnings announcement that Electrolux was preparing to defend itself in court.
For GE, completing the sale would further its tilt toward manufacturing operations centered on heavy-duty machinery, including oilfield equipment and jet engines. CEO Jeffrey Immelt is shedding consumer-focused divisions and about $200 billion of financial businesses while bulking up the industrial units.
The case is U.S. v. AB Electrolux, 15-01039, U.S. District Court, District of Columbia (Washington).